This is the first in a series of posts regarding innovation in the retail industry.
Since 2009, I’ve been working in the innovation space as a management consultant. I’ve also taught courses at the graduate and undergraduate levels on managing innovation and design. My students and I have combed through dozens of case studies and mined our own business experiences for examples of companies with innovative cultures. One company that always stood out was Target, the retail behemoth located in Minneapolis.
Imagine my surprise when I saw the news this spring that CEO, Brian Cornell, has dropped innovation as an initiative in order to focus on “the core business.” What? Why? What was the backstory? How could any major retailer scrap its innovation focus in times like these, when Amazon and Walmart are duking it out online and Amazon is opening pilot brick and mortar stores?
I decided to see what I could turn up by doing a little research, starting with Target’s CEO, Brian Cornell. Innovative thinking occurs across the entire organization, but unless the CEO has a propensity to innovate, and understands the challenges of creating and/or maintaining an ongoing innovative environment, game changing ideas will stay in the dark waters of employees’ minds, never surfacing to become reality.
My research turned up a Forbes article (Aug. 2014) by Walter Loeb, known in the industry as the “dean of retailing.” Entitled “Target’s New CEO Brian Cornell Lacks Innovative Pizzazz,” Loeb’s analysis of Cornell’s leadership potential is illuminating. Cornell’s career portfolio includes roles at Frito-Lay, PepsiCo and Quaker Foods, but his executive assignments at Sam’s Club, Michaels; and Safeway were short tenures of three years or less. The bulk of his expertise is on the food side— the commodities business. Success in retailing commodities centers on operations and supply chain innovations. Examples of leaders are Amazon and Walmart. Target’s innovation investments have been in areas to compete with Walmart and Amazon, with now-scrapped projects: Goldfish and Store of the Future.
Target made its mark in retailing as a first mover by using design across the merchandise offerings. Name designers were eager to partner with them. They loved the vision to make cutting edge design affordable for everyone.
Loeb alluded to the potential Target had for innovation in his article when he wrote, “Target is on the cusp of an abyss. Young couples that used
to shop in the store because if was fashionable and merchandise was edgy…are no longer shopping aisle by aisle. They are texting and tweeting each other.” His off-the-cuff thoughts about what Target could do to bring them back from Uniqlo and Forever21 would have been a good start to inspire creative options.
Target’s goal of the past 5 years has been to compete with Amazon and Walmart in e-commerce and brick and mortar innovations. This is not innovation. This is playing catch up. Furthermore, this wasn’t Target’s core business; design was core.
Implementation of ideas took too long, sales continued to decline, and Cornell decided to scrap them. When companies fail to execute quickly, they will be either disrupted by competition or interrupted by stockholder pressures. The question is, what will Target’s leaders do now to spur top-line growth? Cost cutting, while easy, is never painless. It’s a downward spiral going the way of Woolworth, SEARs and K-Mart.
Join me on this journey as I look at the challenges of innovating at warp speed. Please share you thoughts and comments to me here or tweet me @connectedage.
Pat Sharp (Bio)
Pat is currently launching Tournovate BIG℠, a gamified approach to infuse companies with innovative thinking and create a sustainable culture of innovation. Pat has worked across a spectrum of industries: financial and professional services, entertainment, manufacturing, and media, including: ENA, Willis Towers Watson, Deloitte, Motorola, and several growth stage companies.